Kenichiro Yoshida - Chair & CEO of Sony Group | In Good Company | Norges Bank Investment Management

Well, thank you for having me.

Okay, sure. Looking back on a long history of 77 years, I believe Sony is a company that has expanded its business based on its origin in sound. The Sony name and brand comes from 'sonus,' which is Latin meaning sound. Since 1946, we have developed businesses in electronics, entertainment, and semiconductors. Our electronics products initially focused on sound, such as paper recorders and transistor radios. Sony's entertainment business also began with music. We launched the joint venture CBS Sony Records in 1968, and a move into pictures came in 1989 with the acquisition of Columbia Pictures. Then in the mid-90s, we started our gaming business. We also engaged in transistors, which were used in transistor radios through our semiconductor business. Sony has the largest share of sensors. So I'll stop here for now.

Well, Steve Jobs has left great influence on technology and entertainment, so we feel honored to have such praise.

Well, one point is I think entertainment content used to be our method for packaged products such as CDs and Blu-ray players, and at one point the method itself became our purpose. People are emotionally moved by the content; it plays an important role in fulfilling people's desire. So this will remain unchanged. So entertainment is now our purpose. That is one point. The other point is focus on creativity. So entertainment has become a purpose, so the most important decision was to shift our focus to creativity. In other words, a pursuit of 'kando,' which is a Japanese word for emotion. First, we exited from our PC business. Then for TVs and smartphones, we focused on a premium buy. Second, we divested a battery and display panel businesses and focused on CMOS image sensors. Third, we invested in entertainment. We strengthened our ability to create IPs, but also invested in direct-to-consumer services in specific areas.

Well, creativity is what we have been focusing on lately. Since I became CEO in 2018, we have been investing in content that is games, music, and pictures. This investment has been led by our acquisition of EMI Music Publishing business, which was a $4 billion deal. And in addition to producing hardware like TVs and smartphones, we also focused on making products that support creators like photographers and cinematographers. The same applies for our semiconductors. In the past, we produced batteries and display panels, but now we are concentrating on CMOS image sensors. The primary use for these image sensors is smartphone cameras. It helps AI to turn users into creators. Taking a more of a helicopter view...

Well, thank for the question. First and foremost, I believe that corporate culture has a significant impact on the success of a company. It influences execution, which is more important than strategy. Culture is what ensures the ability to execute. For especially value is the culture of not fearing failure and learning from failure. I have one example actually. Back in 2015, we launched a DTC service that covered general entertainment such as live TV, movies, and sports. However, we were not able to obtain many subscribers, and we learned that covering broad entertainment requires a high level of capital. After less than 5 years, we had to announce the closure of the service. This was a business failure. However, through this initiative, we learned a great deal about DTC services. It has led to the idea of focusing on communities, specific areas of entertainment. So examples are PlayStation social network and Crunchyroll, an anime DTC service.

Well, yeah, that's challenging. But I think nowadays even in Japan there are many startups, so I think the culture of challenge is now being nurtured in the Japanese culture with Japanese society, I think.

One thing, companies must face many stakeholders such as customers, employees, shareholders, and society. And I also believe that for all of us, the most important stakeholder is planet Earth. The time horizon differs depending on the stakeholder. However, I believe it's important for companies to have long-term thinking to build a sustainable future for the next generation. Historically, people in Japan had often one job for life and...

Employment is maybe that is Japanese culture, and there are merits to having employees who know the company well. However, I believe that having diverse backgrounds and experiences is important for your career. Sony has many businesses, and we provide opportunities to our employees to work at different groups. We also have a program called Sony University designed to foster global leaders. Through this program, employees from diverse backgrounds can interact with each other and build relationships that go beyond business boundaries.

Well, rather than demanding perfection, I think it is more valuable to experience failure. This is because people can learn and grow from mistakes.

Well, I said I led the project of general DTC service. It was a complete failure. That is called PlayStation Vue, but that was the general entertainment DTC service. Well, we closed the service and we learned from that failure.

In short, it will be ubiquitous. Wherever there is computing, users will be able to play their favorite games seamlessly. Gamers will be able to find a place to play in different spaces. Why PlayStation will remain our core product. We will expand our gaming experiences to PC, mobile, and cloud.

Well, the reality is I don't have much time to play games on a daily basis now. But I am personally looking forward to playing Marvel's Spider-Man 2. Well, we do subscription business model. At the same time, people usually play one game at a time, so all-you-can-eat type of many games may not be so valuable compared with video streaming services. So we have kind of based a hybrid service on PlayStation Network subscription as well as payer content.

Competition is necessary for the game industry to grow. And at Sony, we believe it is important to provide gamers with different options to play. So we will continue our efforts to achieve this.

Our role is to foster and support artists and songwriters around the globe. Our top artists include Beyoncé, Harry Styles, and Cesa.

Well, I recently met, but not really a friend, but I met Adele and Harry recently. Yes, very much.

Our strategy in movies in the pictures business is becoming a strategic supplier. We do not own the general entertainment DTC service, so as an independent studio, we work with partners and identify the best place to distribute to create content. However, we directly deliver content to users in specific categories such as anime. We share the data gained through our service so that creators can utilize it to enhance content creation. So again, we are focusing on the creation side.

The convergence of computing and entertainment is a mega trend, and AI is also born out of computing. So we cannot get in the way of technology, but at the same time, entertainment is a people business. For example, it is technically possible to create a movie scene in which Tom Cruise speaks Japanese with perfect lip sync, but should be? That is a question. The content that forms the basis of entertainment is creator-generated and copyrighted. Creator's involvement is essential. So therefore, Sony positions AI as a technology that supports creators. AI should not replace them. One example is games. Games are computer software, it is made by programming language. Large language model will help streamline game development, allowing creators to focus more on creativity.

There are many moments throughout my experience at Sony, but if I want to choose one, it will be my experience as a president at So-net. After becoming president and going public, I changed the company name from Sony Communication Network to So-net Entertainment. I believe that the 21st century will be the era of entertainment, and in that, the internet would play a central role. So I managed the company with a vision to make it a strong presence in this field, network entertainment. I also removed the Sony brand, aiming to become independent from Sony. So the experience I gained at So-net have definitely helped me to become the leader I am today.

I think communication is the most important. Communication with our people, at the same time communication with our stakeholders including shareholders. So our vision is quite long term, our purpose is quite long term. So I think as a CEO, direction and decision and people are the most important thing.

Yes, because I think I still have a lot to learn from others. And dreams and curiosity is the actually the first value that I define along with a purpose which I want our employees to change.

I have a 27-year-old son. He's on the autism spectrum. He spends weekdays at a group home and comes home on weekends. So during the weekend, we go out by car or train and have lunch together. It's usually Japanese noodles or Japanese omelet rice. Actually, for me, spending time with him is relaxing. Those on the autism spectrum are very diverse. In my son's case, he can remember the full names of people he meets and never forget them, but he cannot communicate in the same way that you or I can. Why? My son has a different way of communicating. He has an incredibly pure perspective. So my wife and I often talk about how much we are influenced by his innocence. He also makes me realize that people operate differently.

I feel humbled to give advice because I'm actually the one that learns a lot from younger generations. But if I was to provide one piece of advice, it would be always challenge yourself. I left Sony to try working at an internet service provider, and I tried many things such as online games, network services, and animation. Many of them were not successful, but they have led me to where I am today and have become assets for me. Even if you fail, you can learn from your failures. So I encourage you to continue to take on new challenges. I am still on the learning journey.

Thank you. Arigato.